Think big, but drink beer locally (2015-03-17)

Beer sales are increasing in Russia. And a foam beverage of the largest foreign companies is not as popular as earlier in Russia. Russian consumers prefer local beer produced in small breweries.

According to the Federal State Statistics Service, in January 2015 beer sales increased to 5,4% from a year earlier. Economic slump played the game of beer and beverage producers. “Despite price hikes, beer remains the cheapest and budget-friendly beverage,” said Vadim Drobiz, the Head of the Russian Regional and Federal Alcohol Markets Studies Center. In January 2015, an average cost of 1 litre of beer reached 84 rub., 12% greater than in January 2014. But prices for other alcohol beverages have also jumped. Two years ago beer sales increased to 3%.

Most of all popular beer brands in the country are produced by the largest companies: Belgium Ab-InBev (Russian subdivision – JSC “Sun InBev”, brands: “Klinskoye”, “Bud”, “Sibirskaya korona”, “Tosltyak”, “Chernigovskoye” etc.), “Baltika” (included into the Denmark Carlsberg, brands: “Baltika”, “Tuborg”, “Arsenalnoye” etc.), Efes (brands: “Stary Melnik”, “EfesPilsner, GoldMineBeer), Heineken (Heineken and Amstel, “Three bears” etc.).

But, according to Nielsen, even in 2007 the market share of mentioned companies in Russia was 92% and 77% – over the past year.

“I think that these companies will continue declining in 2015,” noted Vadim Drobiz.

Besides, local beer brands augment positions. (for example, “Zhiguli” and “Khamovniki” of the Moscow Brewing Company). A prohibition on high-priced beer advertising has also mended the situation. As soon as “Klinskoye”, “Sibirskaya korona” and other brands stopped to be advertised, a consumer began paying attention to his taste preferences and as a result to local brands.  

Largest foreign companies have to close their plants. “Brewing Company “Baltika” informed about closing of plants in Krasnoyarsk and Chelyabinsk. Two subdivisions, “Baltika-Pikra” and “Baltika-Chelyabinsk” will stop operating in April 30, 2015. “Baltika” will dismiss 560 employees.

However, closing of plants in Krasnoyarsk and Chelyabinsk was predicted. Actually, production in Krasnoyarsk was stopped even in September 2014 and production capacities of Chelyabinsk plant were only 28%.

“Sun InBev” has already closed five brewing plants in Russia. Last year plants in Angarsk and Perm were shut down. In June 2013 – in Novocheboksarsk, in August 2012 – in Kursk and in 2009 – in St. Petersburg. “Efes” company has also closed two plants in Russia.

But foreign companies denied that local brewers pressed them. They believe that drop in sale was due to high excise rates and anti-alcohol policy: prohibition of alcohol sale in kiosks and beer stands.

“The problem is tough state regulation of the industry and as a result beer becomes less interesting and a problematic product for participants of the trade sector,” said Oraz Durdyev, the Director for Legal Issues and Corporate Relations of “Sun InBev”.

Nevertheless, Vadim Drobiz explains efforts of transnational companies to tie industry loss with tough state regulation as an attempt to excuse themselves in the eyes of foreign shareholders.

Note of A. Mordovin: “That’s right. As we have already told: we support new tendency. We hope that the wind will always fill the sail of the handsome and proud ship of the Russian independent brewing business.

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